Morning Briefing - 23 May 2022
CommoPlast
Morning Briefing
23 May 2022
Brent: $112.55 (+ $0.51）
WTI: $113.23 (+ $1.02）
Naphtha CFR Japan: $903 (+ $21)
Ethylene CFR NEA: $1100 (Stable)
Ethylene CFR SEA: $1150 (Stable)
Propylene FOB Korea: $1075 (Stable)
Propylene CFR China: $1050 (Stable)
*Data reflects closing prices on the previous trading session.
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A week after the Chinese government announced the reopening plans for Shanghai, the local PP and PE market here showed little changes. Buyers remain less than enthusiastic about making replenishment even after the Nanjing municipal government distributed consumption vouchers that are worth about CNY 2 billion, which is supposed to boost demand.
Sources said that the flare up of COVID-19 infection cases in other areas, including Jiangyin – one of China's most economically vibrant towns, overshadow other aspects. In addition, the lack of workforce might cripple manufacturers’ ability to restore normal operating rate quickly, which ultimately discourage customers from keeping high raw material stocks.
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The general expectations among Southeast Asia customers are that the import homo-PP market might have reached the cyclical bottom. However, sellers offering at the upper end of the overall price range received no relief as regional buyers lack the risk appetite to lift acceptance levels. In fact, a South Korean producer complained of poor responses from Vietnamese buyers as they kept yarn offers firm at $1270/ton based on CIF terms.
On the contrary, buyers expect June PE shipment offers to take another notch down. With the plunge in ethylene costs coupled with the lack of demand in China, regional buyers are reluctant to accept prices above the $1300/ton mark for deep-sea HDPE and LLDPE film cargoes.
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The PVC market situation in India – the world’s largest PVC importer, is daunting. A key local producer cut spot offers by INR10,000/ton ($128/ton) while implementing a price protection scheme until 1 June or the next price change to compete with the rapid falling import offers.
Demand is soft ahead of the monsoon season. Meanwhile, industry sources are watching out for the government’s decisions on lowering import duty for PVC (under the heading of 3904 in the HS code) from the current 10% to 7.5% to ‘reduce the costs of domestic production of plastic products.’ If approved, the PVC market landscape in India would become more dynamic with the increased presence of imported materials.
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